As Russian oil purchases soared, India paid $15 billion of imports in rupees over three months

📌 Summary:

• Even as the rupee hit repeated all-time lows after the West Asia war, India paid for nearly $15 billion of imports in rupees during March-May 2026 — mostly for Russian oil
• Per RBI data, imports worth Rs 1.38 lakh crore were settled in rupees in those three months (~7.1% of merchandise imports; ~$14.6 billion at the average 94/dollar rate), up sharply from Rs 42,506 crore (2.4%) in December 2025-February 2026
• Cause: a US sanctions waiver (first announced March 12, renewed until it lapsed June 17) on buying sanctioned Russian crude led India to raise purchases to record levels as Hormuz closure (after the US-Israel strike on Iran) cut off ~40% of oil normally routed via the Strait
• India imported $17.13 billion of Russian crude in March-May (up 30% y-o-y) vs just $2.49 billion in February; economists say rupee depreciation explains only a small part of the jump — the surge in Russian oil buying is the main driver
• Mechanism/rationale: paying for imports in rupees reduces foreign-currency outflow and helps stabilise the exchange rate; India ran a $119 billion trade deficit in 2025-26, so its import bill is highly exposed to rupee weakness
• The RBI's 2022 framework for rupee trade settlement enabled this; rupee-settled exports also jumped (Rs 41,373 crore in March) before easing

🎯 UPSC Relevance: GS3 Economy & GS2 IR — rupee internationalisation and trade settlement, energy security, sanctions navigation, balance of payments and exchange-rate management amid geopolitical shocks

📝 Prelims Facts:

• Rupee-settled imports March-May 2026: Rs 1.38 lakh crore (~$14.6 bn, ~7.1% of imports)
• Russian crude imports March-May: $17.13 bn (up 30% y-o-y); India's 2025-26 trade deficit: $119 bn; RBI rupee trade-settlement framework: 2022

🔑 Key Term: Rupee trade settlement — a mechanism (RBI framework, 2022) allowing international trade to be invoiced and paid in Indian rupees, reducing dependence on the US dollar